Position paper: draft Residential Tenancies Bill

Support better laws for the 1 in 4 people in NSW who rent

• With 25 percent of people in New South Wales renting their homes, tenancy law needs to be clear and fair.
• After nearly 20 years, the most comprehensive review of tenancy law in New South Wales is nearly complete. Submissions on a draft Bill closed in December 2009 and work is underway on a final Bill.
• The draft Bill is generally sound and uncontroversial. It will make tenancy law clearer, fairer and easier to administer.

Three benefits of the draft Bill

1. Co-tenants: For the first time, co-tenants would have a fair, straightforward way of ending their liability when they move out (under the current law, a co-tenant may remain liable for rent and damage even years after they have left).

2. Domestic violence: The draft Bill would allow survivors of domestic violence to change their tenancy status when a violent tenant or co-tenant is excluded from the premises by an AVO. This supports the objective of ‘staying home, leaving violence’.

3. Rent arrears: The draft Bill would ensure that tenants who pay arrears in full or according to an agreed plan get to keep their tenancies. This will encourage arrears to be paid, and reduce unnecessary terminations and homelessness. The draft Bill would also speed up the process for landlords’ applications to the Consumer, Trader and Tenancy Tribunal (CTTT) in relation to rent arrears.

However, there are four problems in the draft Bill that must be corrected in the final Bill.

Four key problems – and solutions

1. Access: Landlords wishing to sell would be allowed access to rented premises to show prospective buyers with only 24 hours notice to tenants. Tenants who deny access could be fined up to $2,200.

The solution: Set a low minimum level of access and encourage landlords to negotiate with tenants for more access, and remove the fine provisions.

2. Uncollected goods: Landlords would be able to give away or destroy former tenants’ uncollected goods after only 14 days, and without regard to the value of the goods.

The solution: Allow landlords to dispose of valuable goods only by sale for reasonable value, with the proceeds to go to the former tenant, less the landlord’s costs.

3. Tenancy databases: Provisions relating to tenancy databases are welcome but contain unintended loopholes that could be exploited by unscrupulous database operators and users (e.g. restrictions as to when a person can be listed on a database would apply to agents and landlords, but not the database operators, who could list persons in their own right).

The solution: Close the loopholes that undermine the objective of effectively regulating database operators.

4. Termination ‘without grounds’: The CTTT would lose its discretion to refuse termination orders to landlords who give termination notices without grounds. This will encourage landlords to use ‘without grounds’ notices, including for unfair reasons such as discrimination.

The solution: Expand the list of grounds on which a tenancy may be terminated, and continue to allow the CTTT to exercise discretion not to terminate a tenancy.

Three non-issues

The real estate industry has criticised three aspects of the draft Bill. We think these criticisms are unfounded – these proposed changes will benefit both landlords and tenants.

Break fees: Currently, the onus is on landlords to quantify and pursue debts caused by tenants who end fixed-term agreements early. Providing a fixed ‘break fee’ for tenants who abandon tenancies is a sensible reform – it would provide certainty to all parties.

Subletting: Tenants would still have to seek their landlords’ consent to sublet premises, and landlords could still refuse– but the refusal would have to be reasonable. The draft Bill still allows landlords to maintain control over who resides in the rental property.

Alterations to premises: Tenants would still have to seek their landlords’ consent to make alternations, and landlords could still refuse – but if the alterations are minor or cosmetic, the refusal would have to be reasonable. Tenants would also no longer be entitled to compensation for their costs and would be liable to make good any damage their alterations cause.